A proposed sales tax could increase the price of online purchases and deliveries

Tuesday, 28th July 2020, 1:44 pm
Updated Tuesday, 28th July 2020, 1:44 pm
If introduced, there would be a tax of around 2% on online sales (Photo: Shutterstock)

Chancellor Rishi Sunak, is considering a new tax on online sales in an effort to boost the UK economy after lockdown.

If levied, the new tax could raise a potential £2 million for the treasury - money that's badly needed after a huge increase in government spending since the coronavirus crisis began.

The move is also being considered as a way to boost business for UK high streets, which have suffered badly during lockdown, thanks to the population remaining indoors. Man have turned to online shopping as an alternative.

How much extra will I be taxed?

According to The Timesthe tax would be around two per cent on all online sales, and/or a tax on deliveries, which could also reduce pollution and traffic.

It will likely be accompanied by a rafter of other measures designed to kickstart the UK economy, as the government faces a hole in public finances of over £322 billion.

News of the tax has been met with some criticism, however, with the British Retail Consortium (BRC) -  the country’s leading retail lobby group - warning that consumers could see prices rise as a result. It has argued that consumers would bear the brunt of the tax, rather than online firms.

Tom Ironside, director of business and regulation at the BRC said, “Taxing the sale or delivery of online goods would simply be another burden on an already overtaxed industry, one that would ultimately hit consumer spending through higher prices."

What are retailers saying?

Several major high street firms, however, have welcomed the idea of an online sales tax.

Tesco’s chief executive, Dave Lewis, has suggested an "Amazon tax" on online sales to prevent the loss of further high street shops.

He said that a tax of two per cent on online sales would raise £1.5 billion a year, enough to cut business rates for all retailers by around 20 per cent.

Should the online sales tax be introduced, it would come hot on the heels of a digital services tax which came into force in April 2020. The digital services tax was aimed at getting tech giants - such as Google and Amazon - to pay fair taxes for profitable business in the UK.